Economics

• Microeconomics


  The study of particular markets and sections of the economy, instead of the economy as a whole
• Macroeconomics


  The study of the economy as a whole instead of individual markets
• Microeconomics decision makers


  • Individuals
  • Households
  • Firms
• Macroeconomics decision makers


  • Government
  • Central bank
• Demand


  The willingness and ability of customers to pay a given price to buy a good or service
• Types of demand


  • Individual
  • Market
• Law of demand


  • Price increases, quantity demanded decreases
  • Price decreases, quantity demanded increases
• Movement along the demand curve

  1. Price changes

  2. Expansion along the demand curve

  3. Contraction along the demand curve
• Shift in demand


  • Shift to the right due to increase in non-price factors
  • Shift to the left due to decrease in non-price factors
• Non-price factors affecting demand

  • Substitute products
  • Income
  • Tastes and preferences
  • Complementary products
• Supply


  The willingness and ability of firms to provide a good or service at a given price level
• Law of supply


  • Price increases, quantity supplied increases
  • Price decreases, quantity supplied decreases
• Movement along the supply curve

  1. Price changes

  2. Extension of supply

  3. Contraction of supply
• Shift in supply

  • Shift to the right due to decrease in non-price factors
  • Shift to the left due to increase in non-price factors
• Non-price factors affecting supply


  • Production technology
  • Costs
  • Subsidies
• Market equilibrium


  The position where the demand of a product is equal to the supply of a product
• Equilibrium price


  The price where the demand curve of a product intersects with the supply curve of a product
• Disequilibrium


  When the quantity demanded of a product is unequal to the quantity supplied, resulting in a surplus or shortage
• Disequilibrium outcomes


  • Surplus
  • Shortage
• In order to reduce excess supply, firms will reduce the price